New Construction and Escrow Management 120912 - … · · 2012-09-11New Construction and Escrow Management Presented by Donna Gagliardo Kogut ... work on or supplies materials for

1

New Construction and Escrow Management

Presented by

Donna Gagliardo KogutVice President – Commercial Title and Escrow

Attorneys’ Title Guaranty Fund, Inc.


Mechanics’ Liens

Mechanics’ Liens

The Law of Mechanics’ Liens– A mechanics’ lien is a lien that Illinois statute allows to

be placed upon real estate to secure payment for work done to improve the land.

– Many types of people and activities will give rise to the right to a mechanics’ lien, including anyone who does work on or supplies materials for construction, renovation, or repair of improvements to the land, anyone who does landscaping or excavation work, or performs services as an architect, structural engineer, professional engineer, land surveyor, or property manager.

2

Mechanics’ Liens

The Law of Mechanics’ Liens– Mechanics’ liens have priority as of the date of

the contract between the contractor and the owner. This means that, although a lien may be recorded

much later in time, it will take priority over other interests in the chain of title recorded after the date of contract. Thus, a mechanics’ lien is a “secret lien” to the extent that the holder of an intervening conveyance, mortgage, or other interest would not have any knowledge of the lien at the time the holder’s interest is recorded.

Mechanics’ Liens

The Law of Mechanics’ Liens– The Mechanics’ Lien Act distinguishes between

a claim by a general contractor, someone who has a contract directly with the owner of the property, and a subcontractor, someone who has a contract with a general contractor.

Mechanics’ Liens

The Law of Mechanics’ Liens– To obtain a mechanics’ lien on property, a

general contractor must file a suit against the owner within two years of completion of the work.

– In order to affect the title of subsequent purchasers and encumbrancers, the general contractor must record a notice of claim for lien within four months after the date that work was completed.

3

Mechanics’ Liens

The Law of Mechanics’ Liens– A subcontractor, in order to obtain a lien, must: first mail a notice of the subcontractor’s intent to file

a lien to the owner and all mortgagees within 90 days (not three months) of the completion of the work for which a claim is made; and

record the notice within four months (not 120 days) of the completion of the work.

– Suit to enforce the lien must be filed by the subcontractor within two years of the completion of the work.

Mechanics’ Liens

Underwriting Guidelines for Mechanics’ Liens

– The following guidelines are designed to help clarify how to proceed when insuring property with mechanics’ lien issues.

– For situations not covered by these guidelines, please contact the Underwriting Department at 312.752.1990 or [email protected].

Mechanics’ Liens

Underwriting Guidelines for Mechanics’ Liens – Standard Exception No. 4 and Special Exception

No. 2a Standard Exception No. 4 appears in Schedule B of the

commitment and Owner Policy and Special Exception No. 2a appears on Schedule B of the commitment.

Both exceptions have the same language, providing that there is no coverage for any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposed by law and not shown by the public records.

– Therefore, under the commitment and Owner’s Policy, no mechanics’ lien coverage is provided for unrecorded lien claims.

4

Mechanics’ Liens

Underwriting Guidelines for Mechanics’ Liens – Standard Exception No. 4 and Special Exception

No. 2a In order to waive or insure over these exceptions,

whether for commercial or residential property, for an Owner’s or a Loan Policy, signed and notarized ALTA Statements must be obtained from the buyers and sellers.

Examine the ALTA Statement to see if there is any indication that lienable work has been performed within the prior six months.

Mechanics’ Liens

Underwriting Guidelines for Mechanics’ Liens– The commitment should contain the following

exception: Satisfactory evidence should be furnished of the payment in full

of the cost of furnishing services, labor, and materials in connection with any improvements made on the land within six months of the date of this commitment. This evidence should consist of sworn contractors’ and subcontractors’ affidavits, together with all necessary waivers of lien.

Note: Sworn statements and waivers must be submitted to our office at least 24 hours prior to closing for review. No waivers will be examined at the time of closing.

Mechanics’ Liens

Section 34 Demand

– Section 34 of the Mechanics’ Lien Act allows an owner to demand that a lien claimant file suit to foreclose its lien within 30 days of receipt of the demand or forfeit its lien.

– If procedures are followed according to statute, the lien may be waived with a Personal Undertaking from the owner.

5


Insuring a Construction Loan


Insuring Clause II of the 2006 ALTA Loan Policy gives the mortgagee coverage against mechanics’ lien claims providing for:– Any work done before date of policy; or

– Work done after date of policy if any portion of work is paid by insured mortgage proceeds.


The 2006 ALTA Loan Policy must be amended when insuring a construction loan with a mortgage that contemplates multiple disbursements during a construction project.

6


Pending Disbursement language must be added to Schedule B of the Loan Policy as follows:– Pending disbursement of the full proceeds of the

loan secured by the mortgage set forth in Schedule A, this policy insures only to the extent of the amount actually disbursed, but will increase up to the face amount of the policy as each disbursement is made in good faith, and without knowledge of defects in, or objections to, the title; subject however, to matters first appearing of public record subsequent to the date of the policy.


Pending Disbursement language must be added to Schedule B of the Loan Policy as follows:– ATG must be provided with properly executed

sworn contractors' statements, sub-contractors' statements, and final lien waivers along with proof of proper disbursements of any loan proceeds used for the improvement of the land, or the policy or policies when issued will be subject to the following exceptions:


Pending Disbursement language must be added to Schedule B of the Loan Policy as follows:– (a) Any lien, or right to a lien, for services, labor, or

materials, heretofore or hereafter furnished, imposed by law, and not shown by the public records.

7


Pending Disbursement language must be added to Schedule B of the Loan Policy as follows:– (b) Consequences of the failure of the lender to

pay out properly the whole or any part of the loan secured by the mortgage described in Schedule A as affecting: (i) the validity of the lien of the mortgage; and (ii) the priority of the lien of the mortgage over any other right, claim, lien, or encumbrance that has or may become superior to the lien of the mortgage before the disbursement of the entire proceeds of the loan.


Issue Construction Loan Disbursement Endorsement (ALTA 32.1-06)(ATG Form 2128-06)– Limits the mortgage insurance coverage to

amount of the loan proceeds distributed as of date of closing.


Disbursement Endorsement (ALTA 33-06) (ATG Form 2129-06)– With each disbursement draw, a Disbursement

Endorsement is issued to increase the coverage of the Loan Policy to the total amount of the loan disbursed to date and extends the date of the coverage to the date of disbursement.

8


Disbursement Endorsement (ALTA 33-06) (ATG Form 2129-06)– With every construction draw, a later date

search is performed, sworn statements and lien waivers are reviewed, and a Disbursement Endorsement is issued.


ATG has a Construction Escrow Department for handling disbursement of construction loans.– Sharon Glavin is the Construction Escrow

Administrator. She can be reached at: 312.752.1986 or

[email protected]


ATG Members must be approved to handle disbursement of construction escrows. The approval process includes:– Written approval from Construction Manager

after review of construction escrow seminar.

– Signed compliance letter.

– Co-examination with ATG Construction Escrow Administrator of first project.

9


ATG Regulation 5 states that members who are NOT approved in writing to handle construction escrows shall be strictly liable to ATG for all loss or damage, including mechanics’ lien claims, suffered by ATG from the construction escrow administration.


The member and staff must have well-defined procedures to review the Owner’s and General Contractors’ Sworn Statements, Lien Waivers, and the other documents involved in the typical construction escrow.

Construction files are subject to audit to determine if proper procedures are being followed for construction disbursement.


If the amount of insurance on the ALTA Loan Policy exceeds $3 million, written authorization from ATG’s Underwriting Department and reinsurer must be obtained prior to issuance of the commitment for title insurance.

A Mechanics’ Lien Risk Assessment (ATG Form 4030) must be completed with all information applicable to the transaction.

10

Obtaining Coverage

Procedures for Obtaining Affirmative Mechanics’ Lien Coverage for New Construction– Prepare Commitment for Construction Loan

with proper Schedule B Exceptions.

– Obtain necessary documents signed by the proper parties.

– Submit Mechanics’ Lien Risk Assessment (ATG Form 4030) for Construction Loans over $3 million.


Construction Escrow Documentation


Construction Loan Escrow Agreement (ATG Form 4024) – Signed by the owner, general contractor, lender,

and escrowee.

– Escrowee liability is limited to actual losses arising from “wrongful disbursement” failure of Escrowee to obtain necessary

documentation;

failure of Escrowee to perform a duty required by agreement;

– i.e., search of records for possible mechanics’ liens, payout from a loan out of balance without notifying lender.

11


Construction Loan Escrow Agreement (ATG Form 4024) – Clearly identifies and distinguishes the duties of

the title company as the title insurer.

– Should provide for suspension of payments upon notification from title insurer of mechanics’ lien claim.

– Should provide no liability on Escrowee for failure of construction work to comply with plans and specifications.

Construction Loan Escrow AgreementATG Form 4024

(page 1 of 9)


(page 2 of 9)

12


(page 3 of 9)


(page 4 of 9)


(page 5 of 9)

13


(page 6 of 9)

Construction Loan Disbursement – Direct Payment Endorsement (ALTA 32.1-06)ATG Form 2128-06

Construction Loan Disbursement Endorsement (ALTA 32-06)ATG Form 2127-06

14

Disbursement Endorsement (ALTA 33-06)ATG Form 2129-06


Owner’s Sworn Statement (ATG Form 3018-A)– Discloses all persons with whom the owner has

contracted for the construction. i.e., General Contractor, Architect, Engineer,

Construction Manager, surveyor, or soil tester.

Owner’s Sworn StatementATG Form 3018-A

(page 1 of 3)

15


(page 2 of 3)


(page 3 of 3)


General Contractor’s Sworn Statement (ATG Form 3018-B or 3018-C)– Lists all subcontractors providing labor and

materials and the amounts of their contracts for the project.

16

General Contractor’s Sworn StatementATG Form 3018-B

(page 1 of 4)


(page 2 of 4)


(page 3 of 4)

17


(page 4 of 4)

General Contractor’s Sworn Statement(No Pre-Itemization)ATG Form 3018-C

(page 1 of 4)


(page 2 of 4)

18


(page 3 of 4)


(page 4 of 4)


Review Owner’s and General Contractor’s Sworn Statements to determine total construction costs.

Compare with total loan proceeds to determine amount of construction costs owner must pay.

19


Personal Undertaking (Owner) (ATG Form 3054)

Personal Undertaking (General Contractor) (ATG Form 3055) – Signed by the owner and general contractor,

agreeing to indemnify ATG for any loss due to non-payment of contractors, subcontractors, sub-subcontractors, and material providers.

New Construction Escrow Procedures

Much of the risk involving new construction is the failure of owner or general contractor to properly disclose all persons with whom they have contracted for the furnishing of labor or materials for the whole project.

Personal Undertaking (Owner)ATG Form 3054

20

Personal Undertaking (General Contractor)ATG Form 3055


Personal Undertaking (Gap) (ATG Form 3040) – Signed by the owner.

– Since there is a gap between the date of the search of the public records and the disbursement date, owner must give the title company assurance no lien will be filed.

Personal Undertaking (Gap)ATG Form 3040

21


Lenders Initial Escrow Certification (ATG Form 4021)– Confirms the condition of the title as evidenced

by the commitment

– Confirms the cost of the construction project based upon Owner’s and General Contractor’s Sworn Statements prior to disbursement.

Lenders Initial Escrow CertificationATG Form 4021


Mechanics’ Lien Risk Assessment (ATG Form 4030)– For all construction loans over $3 million.

– This form is designed to be a useful guide to underwriting mechanics’ lien risk.

– We are asking you to consider whether each area is relevant and to complete the form accordingly.

22

Mechanics’ Lien Risk AssessmentATG Form 4030

(page 1 of 5)


(page 2 of 5)


(page 3 of 5)

23


(page 4 of 5)


(page 5 of 5)


Issuance of ALTA Loan Policy

24


Obtain Later Date to cover the construction mortgage, with the Date of Policy being the date of recording of the mortgage, and the Amount of Insurance being the full amount of the construction mortgage.


Concurrently with the issuance of the ALTA Loan Policy, issue the ALTA Construction Loan Direct Payment Disbursement Endorsement (ATG Form 2128-06), modifying the Amount of Insurance to the amount actually disbursed as of the Date of Policy.

Construction Loan Direct Payment Disbursement Endorsement (ALTA 32.1-06)ATG Form 2128-06

25


Procedures for Construction Disbursement


For each disbursement draw, the following documents must be submitted:– Owner’s Sworn Statement

(ATG Form 3018-A) Use if Owner is paying any subcontractors from their

funds directly.

– General Contractor’s Sworn Statement (ATG Form 3018-B or 3018-C) Show all subcontractors and materialmen receiving

payment. – Obtain the Owner’s contribution prior to payment of any

loan proceeds.


For each disbursement draw, the following documents must be submitted:– Waiver of Liens to Date and Contractor’s

Affidavit (ATG Form 3019) or

– Final Waiver of Lien and Contractor’s Affidavit (ATG Form 3005)

– Also Contractor’s Affidavits for all subcontractors being paid.

26


Waiver states:– Materials used were delivered to our

warehouse, taken from fully-paid stock, and delivered to job site in our own truck. All labor has been paid in full. No outside rental equipment was used. Our principal supplier is *.


Certificate of Completion (ATG Form 4020) – Obtain Certificate of Completion from Engineer,

Architect, or Lender Representative stating that work for which payment is requested has, in fact, been completed.

Certificate of CompletionATG Form 4020

27

Procedures for Construction Disbursement Draw

Owner’s Payment Authorization (ATG Form 4114) – Obtain Owner’s Payment Authorization stating

Owner is in agreement with subcontractors on General Contractor’s Sworn Statement being paid for labor and materials.

Owner’s Payment AuthorizationATG Form 4114


Disbursement Letter – Letter from lender stating amount of loan

disbursed to date and requesting Construction Loan Disbursement Endorsement.

28


Establish that loan is in balance and there are sufficient funds to complete project and pay related costs.

Conduct a Later Date Search to determine no liens have been recorded and taxes have been paid, if applicable.


Disbursement Endorsement (ALTA 33-06) (ATG Form 2129-06)– Issue the Disbursement Endorsement, which

extends the policy coverage to date of the last disbursement and increases the Amount of Insurance to cumulative total of the amount of the loan disbursed. It also provides mechanics’ lien coverage for the amount of the last disbursement.

Disbursement Endorsement (ALTA 33-06)ATG Form 2129-06

29


Review of Forms

Review of Forms

The Owner shall sign the following forms:– Construction Escrow Agreement

– Personal Undertaking (Owner)

– Personal Undertaking (Gap)

– Owner’s Sworn Statement for the entire project Identifies the contractors with whom owner has a

contract and any suppliers or materialmen the owner will pay directly, i.e., contract manager, architect, engineer, surveyor, soil testing

Review of Forms

The General Contractor shall sign:– Construction Escrow Agreement

– Personal Undertaking (General Contractor)

– General Contractor’s Sworn Statement Listing all contractors who are supplying labor and

materials for the entire project

30

Review of Forms

The Lender shall sign:– Construction Escrow Agreement

– Lenders Initial Escrow Certification Certifying condition of title and Owner’s and General

Contractor’s Sworn Statements.

Review of Forms

Owner’s Payment Authorization– Acceptance by owner of general contractor’s

payment of subcontractors and materialmen.

Certificate of Completion– From Lender and/or its representative

authorizing work completed.

Disbursement Letter– From Lender stating amount disbursed to date

and requesting Construction Loan Disbursement Endorsement’

Review of Forms

Waiver of Lien to Date– Waives the right to lien for labor and materials

furnished to a date specified.

Final Waiver of Lien– Waives right to lien “heretofore or hereafter

furnished” for labor or materials. Waivers conditioned on receipt of payment are not

acceptable.

31

Review of Forms

IRS Form W-9 – W-9 from each contractor receiving payment (if

not already on file).

– Any contractor receiving more than $600.00 must supply a W-9 indicating their Taxpayer Identification Number.


Most Common Issues with Construction Sworn Statements


Provide type of work, amount of contract for each trade, amount paid, and the balance due, if any.

Make sure all trades are appropriately listed, with complete addresses for subcontractors.

Make sure numbers going down and across are totaled correctly.

32


When comparing General Contractor’s Sworn Statements from draw to draw, the same contractors should be listed.

If the General Contractor shows a subcontractor has been paid a partial draw and the balance is shown to another subcontractor, we cannot pay the new subcontractor until we receive a Final Waiver of Lien from the first subcontractor.


Review the General Contractor’s Sworn Statement for contract amounts changing due to change orders or reducing or increasing the price.

Question the general contractor any time this happens; however, it is best to get confirmation from the subcontractor.


Most Common Issues with Lien Waivers

33


Review the language used.

Lien Waivers should identify the person the subcontractor was employed by to supply work or material for.

Describe the work or material furnished.

State the property address.


Material information is reflected on the waiver affidavit, be it stock statement language or back-up material waivers.– Material waivers are usually for concrete,

drywall, electrical, plumbing, HVAC, masonry, and carpentry.

Lien Waivers must be properly executed and notarized.


Lien Waiver must state the total amount of the contract as shown on the Owner’s and/or General Contractor’s Sworn Statement.

Know the difference between a Waiver of Lien to Date and a Final Waiver of Lien.

34


If any payments are made to the general contractor without the owner first obtaining the General Contractor’s Sworn Statement, all such payments are deemed to have been wrongfully made and the owner may be required to pay subcontractors if the general contractor fails to pay them.


Final Loan Disbursement


Obtain Survey of the project “as built,” if required by Escrow.

Obtain an architect’s final certificate that the building complies with the plans and specifications, building codes, covenants, and restrictions, and that all “punch list” items have been completed.

35


Obtain a certificate of occupancy, if required by escrow.

Obtain final Owner’s and General Contractor’s Sworn Statements showing all contractors paid.

Obtain final lien waivers from all contractors, subcontractors, sub-subcontractors, and material providers.


Obtain final Owner’s Payment Authorization stating the owner agrees with the amount of Final Disbursement, there are no disputes regarding final payment, and final disbursement should be made.


Perform final title search to establish no mechanics’ liens have been recorded, taxes are paid to date, and no other encumbrances have been recorded.

Make sure you have 1099 information for all contractors, subcontractors, and materialmen paid.

36


Issue final construction Disbursement Endorsement (ALTA 33-06) (ATG Form 2129-06), increasing Amount of Insurance to full amount of construction mortgage.


Establishing the Escrow Account


ATG requires proper conduct, maintenance, control, and reconciliation of Agency Escrow Disbursement Accounts by its members who maintain such accounts.

37


ATG Regulation 1.F. governs the use of Agency Escrow Disbursement Accounts.– A construction escrow account must comply

with the Rules and Regulations of ATG, the Illinois Rules of Professional Regulation, and the Illinois Title Insurance Act.


The ATG Regulation provides that the ATG member shall provide an irrevocable letter of direction to the institution at which the current account is established, authorizing ATG to review and audit the institution’s records of the Account at such time that ATG, in its sole discretion, deems necessary or appropriate.


ATG may, for cause, terminate or suspend an ATG member’s authority to maintain the account.

38


An Agency Escrow Disbursement Account is used to make disbursements for closings for which the ATG member is acting as ATG’s agent. Any other use of the Agency Escrow Disbursement Account is strictly prohibited.


Only ATG members in good standing may have an Agency Escrow Disbursement Account bearing ATG’s name or logo.


ATG guidelines provide language for naming the Agency Escrow Disbursement Account:– Agency Escrow Disbursement Account

John Doe, Title Insurance Agentor

– Attorneys’ Title Guaranty Fund, Inc.Agency Escrow Disbursement AccountJohn Doe, Title Insurance Agent

39


Rule 1.15 states that “client trust account” or “client funds account” or words of similar import be used to indicate the fiduciary nature of any trust account.


In addition to ATG’s Rules and Regulations, the Illinois Rules of Professional Conduct, the Illinois Title Insurance Act, and various banking laws and regulations govern the operation and creation of attorney’s and title agent’s escrow accounts.


When an Agency Escrow Disbursement Account is established, the member must report the account number, the bank name and address, and the member’s name and number for the member’s agency escrow disbursement account to ATG’s Risk Administrator.

40


The member is responsible for the proper conduct, maintenance, and reconciliation of the account. The Risk Administrator will conduct periodic audits and will verify the reconciliation of the account.


In Illinois, attorneys are always required to keep clients’ and third parties’ money or property separate from the attorney’s own money or property, pursuant to Rule 1.15 of Illinois Rules of Professional Conduct.


There are only two types of client trust accounts.– An Interest on Lawyers Trust Account (IOLTA);

or

– A separate Interest Dividend-Bearing-Non-IOLTA account.

41


An IOLTA account is a pooled interest-or dividend-bearing client trust account to hold nominal or short-term client funds.– Lawyers Trust Fund of Illinois (LTF) is

designated as the income beneficiary.

– Attorneys must contact LTF to obtain its federal Taxpayer Identification Number to provide to the financial institution holding the account.


Non-IOLTA accounts are separate, interest-bearing client trust accounts of a specific client.– The client is designated as the income

beneficiary.

– Non-IOLTA accounts cannot be pooled accounts.


Trust funds that are nominal in amount or expected to be held for a short period of time must be deposited into an IOLTA account.

42


Rule 1.15(a) requires that each client trust account be maintained in an “eligible financial institution” or a savings bank insured by the FDIC.


Rule 1.15(h) creates an overdraft notification requirement, which is a requirement that financial institutions must meet to be eligible to hold client funds for attorneys.– Financial institutions must agree to notify the

ARDC when a client trust account is overdrawn.


Rule 1.15’s good funds requirement requires that the bank sign an agreement to honor all disbursement orders drawn on a Real Estate Funds Account “REFA” up to a specified dollar amount, not less than the good funds deposit amount.

43


Rule 1.15 states:– The funds must be held in a financial institution

insured by the FDIC.

– The account must be disclosed in the bank’s deposit account records as a fiduciary account.

– Identify the fiduciary nature of the account.


Both Rule 1.15 and the Illinois Title Insurance Act require detailed recordkeeping of escrow accounts.


The Illinois Title Insurance Act requires:– that the escrow agent maintain separate

records of all receipts and disbursements of the escrow; and

– that the funds not be subject to any debts of the escrowee.

44


Section 26 of the Illinois Title Insurance Act requires that a check drawn on the fiduciary trust account of a title insurance company or title insurance agent is considered “good funds.”


Lenders require that the funds for a closing be wired to an account that bears the same name as the title agent who is closing the transaction.– The name on your escrow account should

match that on your commitments and closing protection letters (CPLs). Therefore, you should use the exact name you used

to register with the state as a title insurance agent.


Personal use of the Agency Escrow Disbursement Account or use for non-ATG transactions is strictly forbidden.– The account must never be used for

transactions other than real estate transactions in which the member is acting as the authorized Title Insurance Agent or authorized closing agent for ATG or escrow disbursement agent of ATG.

45


Good Funds– Rule 1.15’s good funds requirement requires

that the bank sign an agreement to honor all disbursement orders drawn on the Real Estate Funds Account “REFA,” up to a specific dollar amount, not less than the good funds deposit amount.


Good Funds– Section 26 of the Illinois Title Insurance Act

prohibits disbursement from a fiduciary trust account unless the funds received are either “good funds” or “collected funds.”


Good Funds– Amounts received from a single party that are

equal to or in excess of $50,000.00 must be one of the following: A wire transfer;

A check issued by one of the following:– State of Illinois

– United States of America

– A political subdivision of the State of Illinois or United States or America;

46


Good Funds– Amounts received from a single party that are

equal to or in excess of $50,000.00 must be one of the following: A check drawn on the fiduciary trust account of the

title insurance company or title insurance agent; or

Collected funds credited to the title insurance company or escrowee’s fiduciary trust account.


Good Funds– A personal check or checks in an aggregate

amount not exceeding $5,000.00 per closing.

– A check drawn on the trust account of any lawyer or real estate broker licensed under the laws of any state, provided that the title insurance agent has reasonable grounds to believe that sufficient funds are available.


EXCEPTION:– If there are payments of less than $50,000.00,

or where any one payment is less than $50,000.00 in the form of: Cashier’s checks, certified checks, bank money

orders, official bank checks, or teller’s checks; and

A check drawn on the trust account of any lawyer or real estate broker.

47


Recordkeeping– The records of an ATG Agency Escrow

Disbursement Account must be kept up to date at all times so that they may be inspected by ATG.

– ATG reserves the right to audit this account at any time and can be expected to do so.


Recordkeeping– All records pertaining to this account must be

kept for seven (7) years beyond the current year, although ATG requires agents to keep title files for 10 years.


Recordkeeping– ATG recommends that agents use three-way

reconciliation features to maintain consistent records.

– ATG requires that agents reconcile their Agency Escrow Disbursement Accounts monthly with the bank statements.

48


Recordkeeping– Rule 1.15 Requirements Prepare and maintain receipt and disbursement

journals for all client trust accounts containing a record of deposits and withdrawals specifically identifying the date, source, and description of each item.


Recordkeeping– Rule 1.15 Requirements Prepare and maintain contemporaneous ledger

records for all client trust accounts showing, for each separate trust client or beneficiary, the source of all funds deposited.


Recordkeeping– Rule 1.15 Requirements Maintain copies of all accountings made to clients or

third persons showing the disbursement of funds to them.

Maintain copies of all retainer and compensation agreements.

Maintain copies of all bills rendered to clients for legal fees and expenses.

49


Recordkeeping– Rule 1.15 Requirements Prepare and maintain reconciliation reports of all

clients’ trust accounts, on at least a quarterly basis, including reconciliations of ledger balances with client trust account balances.

Make appropriate arrangements for the maintenance of the records in the event of the closing, sale, dissolution, or merger of a law practice.


Recordkeeping– Basic accounting journals and forms are

available on the ARDC and LTF websites to help attorneys meet these recordkeeping requirements.


Wire Procedures– Ensure that two people are always involved in

the wire process, one to originate and one to approve and release the funds.

50


For all ATG Members operating through the Title Services Department, ATG requires an Indemnity Agreement when the member holds a title indemnity escrow in his/her own office trust account rather than use the ATG Escrow Department.


Owner’s Construction Escrows


The owner’s escrow is used in situations in which the owner is funding the entire cost of the construction project and desires that the escrowee review waivers and handle disbursements. These escrows usually do include title insurance.

51


Owner’s Policy– ATG will generally not insure the owner against

mechanics’ liens for an Owner’s Policy where the owner is the party who has contracted for the erection of improvements on his own land, since the owner has control over who is hired to do the work and ultimately, the owner is liable for the cost of construction.


Procedures for Owner’s Construction Escrow– Owner will execute: Owner’s Construction Escrow Agreement without

Title Insurance (ATG Form4123)

Personal Undertaking (Owner) (ATG Form 3054)

Owner’s Sworn Statement for the entire project (ATG Form 3018-A)

Owner’s Initial Escrow Certification (ATG Form 4021)


Procedures for Owner’s Construction Escrow– Contractor will execute: Owner’s Construction Escrow Agreement without

Title Insurance (ATG Form 4123)

Personal Undertaking (General Contractor) (ATG Form 3055)

General Contractor’s Sworn Statement for the entire project (ATG Form 3018-B or 3018-C)

52


Owner’s Construction Escrow Agreement without Title Insurance (ATG Form 4123)– This Escrow Agreement differs from the

Lender’s Escrow Agreement as no title insurance is provided and no interim mechanics’ lien coverage is given.

– All that is provided in an Owner’s Escrow is a review of the sworn statements and lien waivers, and payment to the contractor, subcontractors, and materialmen.

Owner’s Construction Escrow Documentation

Owner Certifies the condition of the title, as stated in the commitment, and confirms the cost of the construction project, as stated in Owner’s and General Contractor’s Sworn Statements.

Identify whether all persons supplying labor and materials have been paid and whether there are disputes regarding the amount due each contractor and subcontractor.

Owner’s Construction Escrow Documentation

Establish that the owner agrees with the amount of the disbursement and that the disbursement should be made.

Establish that the work has been completed for which payment is being made.

53


The following is the order of tasks to be performed by the escrowee when an Owner’s disbursement is requested:– Obtain and review the Owner’s and General

Contractor’s Sworn Statements for the current disbursement request.

– Obtain and review lien waivers for all lienable work for which disbursement will be made.


The following is the order of tasks to be performed by the escrowee when an Owner’s disbursement is requested:– Obtain and review Owner’s Payment

Authorizations and Certificate of Completion.

– Obtain and review a title search report.

– Disburse payments to contractors and subcontractors and obtain receipts.


Problem Escrows

54

Problem Escrows

Out-of-Balance Loan– The greatest danger in administering a

construction escrow is allowing the loan to become out-of-balance. This simply means that the remaining loan proceeds are insufficient to pay the balance of the construction costs.

Problem Escrows

Out-of-Balance Loan– Ideally, the loan proceeds should be the last

ones used, such that upon payment of the last dollar of the loan proceeds, the construction project has been completed and fully paid.

– The owner should be required to first use their capital contribution before disbursing the loan proceeds.

Problem Escrows

Out-of-Balance Loan– Many owners attempt to use the loan proceeds

first, but this will give the owner an incentive to not pay the contractors if a dispute arises. Once payment stops, mechanics’ liens are sure to follow.

55

Problem Escrows

Out-of-Balance Loan– The escrowee should stop disbursements

when the loan is out-of-balance until the owner deposits sufficient funds to make up the difference or until instructed in writing by the lender to disburse despite the out-of-balance loan.

Problem Escrows

Out-of-Balance Loans– A related problem is “front loading” by the

general contractor. This means that the general contractor applies for a

greater percentage of payments for itself than are being paid to the subcontractors.

Once the general contractor has received a substantial portion of the costs and profits due it, there is little incentive to complete the project or to resolve subcontractor disputes.

Problem Escrows

Mechanics’ Lien Claims– Under Illinois law, once the mechanics’ lien is

recorded, its priority is determined by, or “relates back” to, the date of the contract between the owner and general contractor, or the general contractor and subcontractor, and not the date of recording of the lien notice. 770 ILCS 60/1. If a contract for the improvement of the property is

entered into prior to the construction mortgage being recorded, the later-recorded mechanics’ lien will have priority over the mortgage.

56

Problem Escrows

Mechanics’ Lien Claims– Even if the contract is entered into after the

date the construction mortgage is recorded, the mechanics’ lien claimant may still be able to gain priority over the mortgage if the lien claimant can prove “enhancement” (that the claimant’s work added value to the property over and above the value of the mortgage) 770 ILCS 60/16.

Problem Escrows

Mechanics’ Lien Claims– No construction loan escrow is complete

without at least one mechanics’ lien claim being filed. Generally, the lien claim will be filed by a material supplier who has not been paid by a subcontractor. These claims can usually be resolved by allowing the owner and general contractor to bring pressure upon the subcontractor to get the lien released.

Problem Escrows

Mechanics’ Lien Claims– Since the owner and general contractor

ultimately have liability for the lien claim under their indemnity agreement, the title company will require them to pay off the claim, post a bond, or establish a title indemnity escrow in order to insure over the lien claim if they are not able to get the Release of the lien claim.

57

Problem Escrows

Mechanics’ Lien Claims– Eventually, a project will be encountered in

which the owner/developer and/or the general contractor are in financial difficulties, and a workout will be required. A workout is simply a plan for completing the

construction project and paying all of the costs by renegotiating with each subcontractor the work to be completed and the amount to be paid to each.

Problem Escrows

Mechanics’ Lien Claims– For the escrowee, the important point to keep

in mind is that all subcontractors must either agree to the workout (and a written agreement should be executed by all subcontractors agreeing to the modified work and contract prices), or those not agreeing must be paid for the work completed and issue final lien waivers.


1099 Reporting

58

1099 Reporting

IRS Code § 6041 requires a construction escrow agent having “oversight functions” or “management functions” to report disbursements exceeding $600 per year to any contractor, subcontractor, or material supplier. – If reporting is required, a 1099 form should be

completed for each contractor being paid.

CONSTRUCTION LOAN ESCROW AGREEMENT

ATG FORM 4024 FOR USE IN: IL, IN © ATG (REV. 7/12) Page 1 of 9

Respond to this office:

One South Wacker Drive 24th Floor Chicago, IL 60606-4654 312.372.8361 Fax: 877.892.6282

2102 Windsor Place P.O. Box 9136 Champaign, IL 61826-9136 217.359.2000 Fax: 217.359.2014

Escrow No.: Date:

ATG® Member Name: Escrow Officer:

TO: ATTORNEYS’ TITLE GUARANTY FUND, INC. (“Escrowee”) At the request of (hereinafter referred to as “Owner/Borrower”), (hereinafter referred to as “Lender”), from time to time, will deposit with Escrowee such proceeds, as it shall determine, of a $ loan secured by a mortgage or trust deed (the “Mortgage”) on the premises legally described in Attorneys’ Title Guaranty Fund, Inc., (“ATG®”) Policy or Commitment for Policy

No. (the “ALTA Loan Policy”) as follows:

and commonly known as , ,

Street Address City State (the “Premises”). Escrowee is authorized and directed to disburse the funds deposited hereunder in the following manner:

1. Pay costs of construction of an improvement (the “Improvement”) to be erected on the Premises; 2. Obtain releases and satisfaction of liens and other encumbrances, if any, pursuant to statements of amounts due, which must

be approved by Owner and Lender; and 3. Pay such other amounts as are approved by Owner and Lender.

The Inspector/Architect is to be and the General Contractor is to be . There will be disbursements, which are to be made in accordance with the terms and conditions of this escrow, as hereinafter set forth.

59

ATG FORM 4024 FOR USE IN: ALL STATES © ATG (REV. 7/12) Page 2 of 9

I. REQUIREMENTS PRIOR TO FIRST DISBURSEMENT

Prior to the first disbursement of funds hereunder, it is a requirement of this escrow that:

A. Escrowee be furnished:

1. Lender Initial Escrow Certification approving the condition of title to the Premises as set forth in the above-referenced ALTA Loan Policy;

2. An approval by Lender for loan disbursement purposes of the Owner’s Sworn Statement and the General Contractor’s Sworn Statement, which are described at I.A.3 and I.A.4 below;

3. An Owner’s Sworn Statement disclosing every contract entered into by Owner and setting forth in detail the names, addresses, and telephone numbers of all contractors with whom it has contracted, type of labor and materials to be furnished, amounts of contracts (including extras and credits), amounts previously paid to date, amounts of current request, accumulative retainages to date, and balances due;

4. A General Contractor’s Sworn Statement setting forth in detail the names, addresses, and telephone numbers of all contractors with whom it has contracted, type of labor and materials to be furnished, amounts of the contracts (including extras and credits), amounts previously paid to date, amounts of current request, accumulative retainages to date, and balances due;

5. A current (dated no more than six months prior to the date of this Escrow Agreement) survey of the Premises prepared in accordance with the most current version of the “Minimum Standard Detail Requirements for Land Title Surveys” as adopted by the American Land Title Association and the American Congress of Surveying and Mapping, by a land surveyor licensed and registered in the state in which the property is located (hereinafter referred to as the “Surveyor”) and certified to the Owner, Lender, and ATG. For each matter of record, the survey shall indicate the recorded document number. This survey, as updated from time to time, is hereinafter referred to as the “Survey.”

B. Escrowee shall be prepared to furnish Lender a Construction Loan Disbursement – Direct Payment Endorsement (ALTA 32.1-06), in the form attached as Exhibit A, to the ALTA Loan Policy covering the requested disbursements, or if such a policy has not been previously issued, Escrowee shall be prepared to furnish to Lender the ALTA Loan Policy with a Construction Loan Disbursement – Direct Payment Endorsement (ALTA 32.1-06) covering the requested disbursement. In the event that Escrowee will NOT be paying the contractor, sub-contractors, or suppliers directly, a Construction Loan Disbursement Endorsement (ALTA 32-06), in the form attached as Exhibit B, will be issued in lieu of the foregoing ALTA 32.1-06 Endorsement.

II. REQUIREMENTS FOR EACH DISBURSEMENT

Prior to each disbursement of funds hereunder, including the first disbursement, it is a requirement of this escrow that Escrowee be furnished:

A. A General Contractor’s Sworn Statement, amended to and including date of disbursement, setting forth in detail the names, addresses, and telephone numbers of all contractors with whom it has contracted, type of labor and materials to be furnished, amounts of the contracts (including extras and credits), amounts previously paid to date, amounts of current request, accumulative retainages to date, and balances due;

B. An Owner’s Sworn Statement amended to and including the date of disbursement, setting forth in detail the names, addresses, and telephone numbers of all contractors with whom it has contracted, type of labor and materials to be furnished, amounts of the contracts (including extras and credits), amounts previously paid to date, amounts of current request, accumulative retainages to date, and balances due;

C. An executed Construction Disbursement Authorization for the requested disbursement;

D. A report by Inspector or a Certificate of Completion as of the date of the Owner’s Sworn Statement and/or the General Contractor’s Sworn Statement, certifying that work has been completed and materials are in place and incorporated into the Improvements as indicated by the request(s) for payment of the Owner and General Contractor;

E. Evidence that sufficient funds are available to cover the requested disbursements and to pay for the completion of the Improvement, including extras, change orders, and non-construction items for which waivers have not been deposited and for which funds have not previously been deposited;

F. Sufficient funds to cover unpaid title, recording and escrow charges, and transfer taxes;

G. Statements, Sworn Statements, supporting lien waivers (consisting of at least Final Waivers of Lien or Waivers of Lien to Date, as appropriate), dated as of the date of the Owner’s Sworn Statement and/or the General Contractor’s

60


Sworn Statement, and releases of lien, if necessary, satisfactory to ATG;

H. Escrowee may, at its option, verify information submitted by Owner and General Contractor or may require Owner and General Contractor to furnish to Escrowee verification by contractors, subcontractors, and material suppliers who have contracted with Owner and/or General Contractor.

III. METHOD OF DISBURSEMENT

All disbursements for construction purposes will be made by Escrowee directly to contractors, subcontractors, and materialmen listed and for the amounts shown on the Owner’s Sworn Statement and/or the General Contractor’s Sworn Statement, unless General Contractor submits a Letter of Direction - Authorization to Pay executed by the subcontractor or materialman certifying payment in full as to the disbursement in question. In the event that General Contractor and any subcontractor jointly authorize, in writing, Escrowee to pay any funds due one to the other, Escrowee may, but is not obligated to, comply with such authorization.

IV. ENDORSEMENT TO POLICY

As Escrowee makes a partial disbursement of mortgage proceeds hereunder, it will furnish Lender an Attorneys’ Title Guaranty Fund, Inc., Disbursement Endorsement (ALTA 33-06) to the ALTA Loan Policy, in the form attached as Exhibit C, covering such requested disbursement.

V. REQUIREMENTS FOR FINAL DISBURSEMENT

Prior to the final disbursement of the funds hereunder, it is a requirement of this escrow that Escrowee be furnished the following:

A. All required documentation for the final disbursement as delineated at II.A. through II.H., inclusive, above;

B. A survey of the property, made in accordance with the requirements of I.A.5. above, showing the location of all Improvements as completed;

C. An ALTA Statement, executed by Owner and Lender;

D. Any and all other documents, undertakings, statements, releases, certifications, or things necessary or desirable to ATG, in its sole discretion, so that ATG is prepared to issue its final Disbursement Endorsement (ALTA 33-06), covering the date of final disbursement, subject to usual terms, conditions, and exceptions appearing in the above-referenced ALTA Loan Policy, and any Construction Loan Disbursement Endorsement (ALTA 32-06, ALTA 32.1-06, or ALTA 33-06) heretofore issued, as approved by Lender pursuant to paragraph I.A.1. hereof.

With respect to the condition of title, the liability of Escrowee in making any disbursements in reliance upon the title evidence referred to above shall not extend to the determination of whether or not it is acceptable to Lender, the furnishing of funds for disbursement by the Lender being considered the acceptance of title as so reported.

VI. OUT-OF-BALANCE LOAN

If at any time during the course of construction, the total of the unpaid disclosed cost of construction of the Improvement, as indicated by the sum of the column totals on the Owner’s Sworn Statement and the General Contractor’s Sworn Statement, exceeds the amount of the undisbursed mortgage proceeds, as calculated by subtracting the total amount of liability of ATG shown on the Construction Loan Disbursement Endorsements from the face amount of the mortgage, Escrowee need not make further disbursements under the terms of this escrow until Owner has deposited in this escrow the sum necessary to make the available funds equal to the unpaid disclosed cost of construction, or unless specifically directed to do so by Lender. Also, if Escrowee discovers a misstatement in a Sworn Statement furnished by General Contractor or Owner, it shall: (1) stop disbursements until the misstatement has been corrected; and (2) inform Lender prior to making a further disbursement even though the same has been corrected.

VII. LIABILITY OF ESCROWEE AND ATG

The functions and duties assumed by Escrowee include only those described in this Agreement and the liability of ATG is limited to the terms, conditions, and exceptions contained in the ALTA Loan Policy. Escrowee is not obligated to act except in accordance with the terms and conditions of this Agreement. Neither ATG nor Escrowee insure that the Improvement will be completed, nor do they insure that the Improvement, when completed, will be in accordance with plans and specifications, nor do they insure that sufficient funds will be available for completion, nor do they make the certifications of the Inspector/Architect their own, nor do they assume any liability for same other than procurement of the report/certificate as one of the conditions precedent to each disbursement.

ATG and Escrowee assume no liability to Owner relating to protection against mechanic’s lien claims.

61


VIII. BILLING

Bill all title, recording, escrow charges, and transfer taxes to Owner and collect the same from the funds deposited by Lender pursuant to this Agreement. All such title, recording, escrow charges, and transfer taxes are to be considered as a cost of construction of the Improvement for purposes of paragraph VI of this Agreement.

IX. GENERAL CONDITIONS

A. At any time prior to its commencement of disbursement of funds hereunder, Escrowee reserves the right to decline commencement of disbursement of funds if ATG declines to insure any risk offered for insurance hereunder, whereupon Escrowee shall return to Lender any documents in its possession relating to such loan and the funds received by it. Commencement of disbursement of funds makes this Agreement effective as to all funds received and disbursed for the construction of the Improvement.

B. Where, after the first disbursement, a further title search reveals a subsequently arising exception over which ATG is unwilling to insure, Escrowee will notify Lender and may discontinue disbursement until the exception has been disposed of to the satisfaction of Lender and ATG. A mechanic’s lien claim over which ATG is required to insure hereunder does not warrant a discontinuance of disbursements.

C. Escrowee shall not be responsible for any loss of documents or funds while such documents or funds are not in its custody. Documents or funds deposited in the United States mail, given to a delivery service, or sent by wire transfer shall not be construed as being in the custody of Escrowee unless and until actually received by Escrowee.

D. Escrowee shall not be liable for loss caused by any error in the reports or certifications furnished it hereunder as to work in place.

E. All approvals of acts hereunder by any party to this Agreement shall be in writing.

F. In fulfilling its responsibilities, Escrowee shall be bound solely by the express terms of this Agreement.

G. Escrowee shall be entitled to assume the genuineness of all signatures and the authenticity of all lien waivers, Sworn Statements, and directions, and of all other documents and things delivered to it pursuant to this Agreement (collectively, “Documents”), if such Documents are submitted as originals; and the conformity with originals of all Documents submitted as copies. Furthermore, in making its examination of the Documents delivered to it under this Agreement, Escrowee shall be entitled to assume that each entity and/or person signing on behalf of such entity had full power and authority to enter into and perform all of its obligations thereunder; and Escrowee shall also be entitled to assume the due authorization by each such entity of all requisite action and the due execution and delivery of such Documents by each such entity.

H. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. If there be more than one person designated herein, the verbs and pronouns associated therewith, although expressed in the singular, shall be read and construed as plural. Whenever the masculine gender is used herein it shall also be read and construed as the feminine, and vice-versa, as the case may be.

I. It is mutually agreed and understood by and between the parties hereto that the agreements herein contained shall extend to and be obligatory and binding upon the heirs, executors, administrators, successors, and assigns of the respective parties hereto.

J. In the event that any provision of this Agreement, or part thereof, shall be held to be void or unenforceable by a final, non-appealable order entered by a court of competent jurisdiction, such determination shall not affect or impair the enforceability of the remaining portions of this Agreement.

K. Each party hereto represents and warrants to the other parties hereto that it has full power and authority to execute this Agreement and to perform or cause to be performed the obligations on its part to be performed.

L. In the computation of a period of time, if any, expressed in this Agreement, the day of the act or event from which said period of time runs shall be excluded and the last day of such period shall be included, unless it falls on a Saturday, Sunday, or legal holiday observed by the office of the Recorder of Deeds of the county in which the Premises is located, in which case the period shall be deemed to run until the end of the next day, which is not a Saturday, Sunday, or such legal holiday.

M. This Agreement constitutes the entire agreement of the parties hereto and supersedes any prior or contemporaneous agreements, representations, or understandings, whether written or oral. This Agreement may be amended only by written instrument executed by each of the parties hereto.

N. The captions contained in this Agreement are for convenience only and are not part of the terms, provisions, or conditions of this Agreement.

62


X. NOTICES

All notices and demands, whether required or otherwise, shall be in writing and served personally or by registered or certified mail, return receipt requested, with proper postage or delivery prepaid, to the parties at the following addresses:

To Escrowee: Attorneys’ Title Guaranty Fund, Inc. Attorneys’ Title Guaranty Fund, Inc. ATTN: ATTN: Construction Escrow No. Construction Escrow No. One South Wacker Drive 2102 Windsor Place 24th Floor P.O. Box 9136 Chicago, IL 60606-4654 Champaign, IL 61826-9136 To Owner: To Lender: To Contractor:

or such other addresses as any party may designate by written notice so served. Each such notice shall be deemed served on the date the U.S. Mail return receipt is signed, or delivery is refused, or the notice is designated by the Postal authorities as not deliverable; or one day after the date of deposit with a national overnight delivery courier for next day delivery; or the date when personally served on such party, as the case may be.

XI. COMPENSATION OF ESCROWEE

Escrowee shall be compensated for its services rendered under this Agreement at the time of, and from the funds deposited for, each disbursement. In addition, Escrowee shall be paid for investment or reinvestment of funds (if directed jointly by Owner and Lender) and for any other special services that may be rendered by it, in accordance with invoices rendered by Escrowee from time to time. All fees and title charges due Escrowee and title charges, search fees, recording fees, transfer taxes, and the like due to ATG, and any other costs and/or fees advanced by Escrowee on behalf of any party to this Agreement shall be paid to Escrowee prior to or contemporaneously with issuance of each Construction Loan Disbursement Endorsement to the ALTA Loan Policy.

XII. BINDING EFFECT

This Agreement may be executed in multiple original counterparts duly executed by Beneficiary, Trustee, Lender, and Contractor; provided, however, this Agreement shall not become binding upon Escrowee until it has received manually executed original copies of the same from each of the foregoing named parties and Escrowee has accepted the same and delivered copies of said executed Agreement to each of said parties.

63


XIII. DEFAULT UNDER MORTGAGE

In the event of default under the Mortgage as declared by Lender and/or foreclosure of the Mortgage by Lender, Escrowee shall have the right to discontinue further disbursements under this Agreement.

Dated this day of , Day Month Year

FOR LENDER:

Title

FOR OWNER:

Title

The undersigned agrees that this Agreement shall not be construed as, nor is it the intent of any of the parties hereto to give any benefits, rights, privileges, actions or remedies to any person, partnership, firm, or corporation, other than ATG, Lender, and Owner, under a third-party beneficiary theory or otherwise.

The undersigned agrees that the Improvement referred to in this Agreement will be constructed and completed in strict accordance with the plans and specifications and the building contract. The undersigned also concurs in and agrees to be bound by and comply with the terms, provisions, and conditions of this Agreement signed by Owner and Lender or their representatives.

FOR THE GENERAL CONTRACTOR:

Title

Accepted this day of , Day Month Year

By:

Title

64

ENDORSEMENT EXHIBIT A

This endorsement is made a part of the policy and is subject to all terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof.

Date Member No. Signature of Member or Authorized Signatory ATG FORM 2128-06 (ALTA FORM 32.1-06) FOR USE IN: ALL STATES © ATG (8/11) EXHIBIT “A” TO ATG FORM 4024 © ATG (REV. 7/12) Page 7 of 9

Policy No.: State Issued:

CONSTRUCTION LOAN DISBURSEMENT – DIRECT PAYMENT ENDORSEMENT (ALTA 32.1-06)

1. Covered Risk 11(a) of this policy is deleted.

2. The insurance (for Construction Loan Advances) added by Section 3 of this endorsement is subject to the exclusions in Section 4 of this endorsement and the Exclusions from Coverage in the Policy, the provisions of the Conditions, and the exceptions contained in Schedule B. For the purposes of this endorsement and each subsequent Disbursement Endorsement:

a. “Date of Coverage” is unless the ATG® sets a different Date of Coverage by an ALTA 33-06 Disbursement Endorsement issued at the discretion of ATG.

b. “Construction Loan Advance” shall mean an advance that constitutes Indebtedness made on or before Date of Coverage for

the purpose of financing in whole or in part the construction of improvements on the Land.

c. “Mechanic’s Lien” shall mean any statutory lien or claim of lien affecting the Title that arises from services provided, labor performed, or materials or equipment furnished.

3. ATG insures against loss or damage sustained by the Insured by reason of:

a. The invalidity or unenforceability of the lien of the Insured Mortgage as security for each Construction Loan Advance made on or before the Date of Coverage;

b. The lack of priority of the lien of the Insured Mortgage, as security for each Construction Loan Advance made on or before the Date of Coverage, over any lien or encumbrance on the Title recorded in the Public Records and not shown in Schedule B; and

c. The lack of priority of the lien of the Insured Mortgage, as security for each Construction Loan Advance made on or before

the Date of Coverage, over any Mechanic’s Lien if notice of the Mechanic’s Lien is not filed or recorded in the Public Records, but only to the extent that direct payment to the Mechanic’s Lien claimant has been made by ATG or by the Insured with the ATG’s written approval.

4. This policy does not insure against loss or damage (and the ATG will not pay costs, attorneys’ fees, or expenses) by reason of any Mechanic’s Lien arising from services, labor, material, or equipment:

a. furnished after Date of Coverage; or

b. to the extent that the Mechanic’s lien claimant was not directly paid by the ATG or by the Insured with the ATG’s written approval.

65

ENDORSEMENT EXHIBIT B


Date Member No. Signature of Member or Authorized Signatory ATG FORM 2127-06 (ALTA FORM 32-06) FOR USE IN: ALL STATES © ATG (8/11) EXHIBIT “B” TO ATG FORM 4024 © ATG (REV. 7/12) Page 8 of 9


CONSTRUCTION LOAN DISBURSEMENT ENDORSEMENT (ALTA 32-06)











the Date of Coverage, over any Mechanic’s Lien if notice of the Mechanic’s Lien is not filed or recorded in the Public Records, but only to the extent that the charges for the services, labor, materials, or equipment for which the Mechanic’s Lien is claimed were designated for payment in the documents supporting a Construction Loan Advance disbursed by or on behalf of the Insured on or before Date of Coverage.



b. not designated for payment in the documents supporting a Construction Loan Advance disbursed by or on behalf of the Insured on or before Date of Coverage.

66

ENDORSEMENT EXHIBIT C


Date Member No. Signature of Member or Authorized Signatory ATG FORM 2129-06 (ALTA FORM 33-06) FOR USE IN: ALL STATES © ATG (8/11) EXHIBIT “C” TO ATG FORM 4024 © ATG (REV. 7/12) Page 9 of 9


DISBURSEMENT ENDORSEMENT (ALTA 33-06)

1. The Date of Coverage is amended to . a. The current disbursement is: $ b. The aggregate amount, including the current disbursement, recognized by ATG as disbursed by the Insured is: $ 2. Schedule A is amended as follows:

3. Schedule B is amended as follows:

Part I

Part II

67

OWNER’S SWORN STATEMENT

ATG FORM 3018-A FOR USE IN: ALL STATES © ATG (REV. 12/11) Page 1 of 3

Escrow No.:

STATE OF SS COUNTY OF

I (We), , being duly sworn, depose and say that I (we) Owner(s) Name(s)

am (are) the owner(s) of the premises commonly known as:

, Street Address City, State, Zip

(the “Premises”); that the persons, firms, and corporations whose names have been set out in this Sworn Statement below include all of the persons, firms, and corporations who have furnished services, equipment, labor, and/or materials in the construction or repair of improvements on the Premises other than those listed on the General Contractor’s Sworn Statement; that, as of this date, all such work has been fully completed and accepted by me (us); that the general contractor and all other parties with whom I (we) have contracted for improvements on said Premises have been paid in full; that, as of this date I (we) have no knowledge or notice of any claim of any subcontractor, laborer, or materialman with respect to said Premises.

Signed this day of , Day Month Year

Name: (Individual/Corporation/Partnership)

By:

Title

Subscribed and sworn before me this day of , Day Month Year

Notary Public

68



Subcontractor Description Contract Amount

Previously Paid This Payment Balance Due

General Contracting

Architect

Engineering

Soil Testing

Surveying

69



Subcontractor Description Contract Amount

Previously Paid This Payment Balance Due

TOTAL LABOR AND MATERIALS TO COMPLETE

RECAPITULATION

Amount of Original Contract $ Work Completed to Date $

Plus: extras to contract $ Less: total retainage $

Total: contract plus extras $ Less: amount previously paid $

Less: credits to contract $ Less: amount of this request $

Total: Adjusted Total Contract $ Total: Balance Due $

70

GENERAL CONTRACTOR’S SWORN STATEMENT

ATG FORM 3018-B FOR USE IN: ALL STATES © ATG (REV. 12/11) Page 1 of 4

Escrow No.:


THE UNDERSIGNED, being duly sworn, on oath deposes and says that he/she is the Title

of , the contractor employed to furnish labor and materials for the General Contractor

work on the building(s) (the Premises) located at Description of Work

, Address of Premises ,

and of which is the owner. That the persons, firms Owner

and corporations whose names have been set forth on this Sworn Statement are all of the persons, firms, and corporations hired by the undersigned to furnish services, equipment, labor, and/or materials in the construction or repair of the improvements on the Premises; that the dollar amount set opposite each person, firm, or corporation in this Sworn Statement is the exact and total amount due or to become due to each such person, firm, or corporation on account of labor, services, equipment, and/or materials furnished with respect to said Premises; that as of this date, all work to be performed with respect to said Premises by the undersigned or any suppliers or subcontractors of the undersigned or any of the persons, firms, or corporations named in this Sworn Statement, has been fully accepted by the owner and completed according to the plans and specifications. The undersigned further states that all material (except as disclosed herein) has been or will be furnished from his/her own stock and has been paid for in full; that there are no other contracts or subcontracts for said work outstanding, and that there is nothing due or to become due to any person for services, equipment, material, labor, or any other work done in connection with said work other than that stated on said Sworn Statement. There are no chattel mortgages, personal property leases, conditional sale contracts, or any other agreements given or are now outstanding as to any fixtures, equipment, appliances, or material placed upon or installed in or upon the aforementioned Premises or improvements thereon. All waivers are true, correct, and genuine, and are delivered unconditionally. Furthermore, there is no claim, either legal or equitable, to defeat the validity of said waivers.



By:

Title


Notary Public

71



Name, Address, and Telephone Number

Type of Labor and Materials

to be Furnished

Amount of Contract

(including extras and credits)

Amount Previously Paid

to Date

Amount of Current Request

Accumulative Retainage

to Date Balance Due

Permit

Excavation

Concrete

Demolition

Masonry

Drywall

Carpentry

Rough Lumber

Finish Lumber

Insulation

Roofing

Gutters

Plumbing

Water and Sewer

Structural Steel

HVAC

72





to be Furnished

Amount of Contract



to Date



to Date Balance Due

Electrical

Doors and Windows

Paining

Cabinets/ Countertops

Flooring

Appliances

Driveway/ Paving

Central Vacuum

Garage Doors

Final Grade

Landscaping

Light Fixtures

Security System

Sprinkler System

Stairs

73





to be Furnished

Amount of Contract



to Date



to Date Balance Due

General Contracting

Overhead and Profit


RECAPITULATION






74

GENERAL CONTRACTOR’S SWORN STATEMENT (No Pre-Itemization)

ATG FORM 3018-C FOR USE IN: ALL STATES © ATG (12/11) Page 1 of 4

Escrow No.:


THE UNDERSIGNED, being duly sworn, on oath deposes and says that he/she is the Title

of , the contractor employed to furnish labor and materials for the General Contractor

work on the building(s) (the Premises) located at Description of Work

, Address of Premises ,

and of which is the owner. That the persons, firms Owner

and corporations whose names have been set forth on this Sworn Statement are all of the persons, firms, and corporations hired by the undersigned to furnish services, equipment, labor, and/or materials in the construction or repair of the improvements on the Premises; that the dollar amount set opposite each person, firm, or corporation in this Sworn Statement is the exact and total amount due or to become due to each such person, firm, or corporation on account of labor, services, equipment, and/or materials furnished with respect to said Premises; that as of this date, all work to be performed with respect to said Premises by the undersigned or any suppliers or subcontractors of the undersigned or any of the persons, firms, or corporations named in this Sworn Statement, has been fully accepted by the owner and completed according to the plans and specifications. The undersigned further states that all material (except as disclosed herein) has been or will be furnished from his/her own stock and has been paid for in full; that there are no other contracts or subcontracts for said work outstanding, and that there is nothing due or to become due to any person for services, equipment, material, labor, or any other work done in connection with said work other than that stated on said Sworn Statement. There are no chattel mortgages, personal property leases, conditional sale contracts, or any other agreements given or are now outstanding as to any fixtures, equipment, appliances, or material placed upon or installed in or upon the aforementioned Premises or improvements thereon. All waivers are true, correct, and genuine, and are delivered unconditionally. Furthermore, there is no claim, either legal or equitable, to defeat the validity of said waivers.



By:

Title


Notary Public

75





to be Furnished

Amount of Contract



to Date



to Date Balance Due

76





to be Furnished

Amount of Contract



to Date



to Date Balance Due

77





to be Furnished

Amount of Contract



to Date



to Date Balance Due

General Contracting

Overhead and Profit


RECAPITULATION






78

PERSONAL UNDERTAKING (OWNER)

ATG FORM 3054 FOR USE IN: ALL STATES © ATG (12/11)

Commitment No.: Escrow No.:

WHEREAS, Attorneys’ Title Guaranty Fund, Inc., hereinafter referred to as “ATG®,” is about to issue its Title Insurance Policy,

insuring against loss by reason of defects in the title to the Land described in ATG’s Commitment of Title Insurance Policy referenced above and commonly known as , .

Street Address City, State, Zip

AND WHEREAS, ATG has noted as exceptions to the aforesaid title the following actual or supposed right, interests, liens, claims, encumbrances, or defects in the title (all hereinafter referred to as “Exceptions”):

Any lien, or right to lien, for services, labor, or material heretofore or hereafter furnished.

AND WHEREAS, ATG has been asked to issue its Title Insurance Policy as aforesaid, either without mention of the aforesaid Exceptions or insuring against loss by reason thereof; and

WHEREAS, ATG may issue either concurrently herewith or hereafter, and in the ordinary course of its business, another policy or policies in the form or forms now or then commonly used by ATG, insuring against loss by reason of defects in the title to said Land or to some parts thereof or interest therein, either without mention of the aforesaid Exceptions or insuring against loss by reason thereof;

NOW THEREFORE, in consideration of the issuance of the Title Insurance Policy and the payment of $1.00 to the undersigned by ATG, the sufficiency and receipt of which is hereby acknowledged, the undersigned, jointly and severally, for themselves, their heirs, personal representatives, and assigns do hereby covenant and agree with ATG:

1. to forever fully protect, defend, and save ATG harmless from and against all the Exceptions, from any and all loss, costs, damages, attorneys’ fees, and expenses of every kind and nature, which it may suffer, expend, or incur under, or by reason or in consequence of the Title Insurance Policy on account of the assertion or enforcement or attempted assertion or enforcement thereof or of any right existing or hereafter arising, or which may at any time be claimed to exist under, or by reason, or in consequence, or growing out of the exceptions or any of them;

2. to provide for the defense, at their own expense, on behalf and for the protection of ATG and the parties insured, or who may become insured, against loss or damage under the Title Insurance Policy (but without prejudice to the right of ATG to defend if it so elects) in all litigation consisting of actions or proceedings based on any Exceptions, which may be asserted or attempted to be asserted, established, or enforced in, to, upon, against, or in respect to the Land or any part thereof, or interest therein;

3. that each and every provision herein shall extend and be in force concerning future policies or commitments.

It is understood and agreed by and between the parties hereto that this agreement, at the option of ATG, shall be converted to ATG’s standard form Title Indemnity Agreement within fifteen (15) days of written demand for deposit in an amount not to exceed 150% of the total of any liens, rights, claims, encumbrances, or defects in title that may become subject to this agreement. Failure to deposit said funds shall constitute a full default under this agreement and all means to enforce this agreement shall become optional and at the disposal of ATG.

IN WITNESS WHEREOF, the parties have executed this agreement this day of , . Day Month Year

Signature Signature

Name (Print) Name (Print)

Address: Address: City, State, Zip: City, State, Zip: Phone: Phone: Accepted:

By: Signature

79

PERSONAL UNDERTAKING (GENERAL CONTRACTOR)

ATG FORM 3055 FOR USE IN: ALL STATES © ATG (12/11)

Commitment No.: Escrow No.:

WHEREAS, Attorneys’ Title Guaranty Fund, Inc., hereinafter referred to as “ATG®,” is about to issue its Title Insurance Policy,

insuring against loss by reason of defects in the title to the Land described in ATG’s Commitment of Title Insurance Policy referenced above and commonly known as , .

Street Address City, State, Zip

AND WHEREAS, ATG has noted as exceptions to the aforesaid title the following actual or supposed right, interests, liens, claims, encumbrances, or defects in the title (all hereinafter referred to as “Exceptions”):

Any lien, or right to a lien, for work, labor, or material arising from contracts let by the undersigned, including, but not limited to, sub-contractors, materialmen, and suppliers claiming thereunder.

AND WHEREAS, ATG has been asked to issue its Title Insurance Policy as aforesaid, either without mention of the aforesaid Exceptions or insuring against loss by reason thereof; and

WHEREAS, ATG may issue, either concurrently herewith or hereafter, and in the ordinary course of its business another policy or policies in the form or forms now or then commonly used by ATG, insuring against loss by reason of defects in the title to said Land or to some parts thereof or interest therein, either without mention of the aforesaid Exceptions or insuring against loss by reason thereof;

NOW THEREFORE, in consideration of the issuance of the Title Insurance Policy and the payment of $1.00 to the undersigned by ATG, the sufficiency and receipt of which is hereby acknowledged, the undersigned, jointly and severally, for themselves, their heirs, personal representatives, and assigns do hereby covenant and agree with ATG:

1. to forever fully protect, defend, and save ATG harmless from and against all the Exceptions, from any and all loss, costs, damages, attorneys’ fees, and expenses of every kind and nature, which it may suffer, expend, or incur under, or by reason or in consequence of the Title Insurance Policy on account of the assertion, or enforcement or attempted assertion or enforcement thereof, or of any right existing or hereafter arising, or which may at any time be claimed to exist under, or by reason, or in consequence, or growing out of the exceptions or any of them;

2. to provide for the defense, at their own expense, on behalf and for the protection of ATG and the parties insured, or who may become insured, against loss or damage under the Title Insurance Policy (but without prejudice to the right of ATG to defend if it so elects) in all litigation consisting of actions or proceedings based on any Exceptions, which may be asserted or attempted to be asserted, established, or enforced in, to, upon, against, or in respect to the Land or any part thereof, or interest therein;

3. that each and every provision herein shall extend and be in force concerning future policies or commitments.

It is understood and agreed by and between the parties hereto that this agreement, at the option of ATG, shall be converted to ATG’s standard form Title Indemnity Agreement within fifteen (15) days of written demand for deposit in an amount not to exceed 150% of the total of any liens, rights, claims, encumbrances, or defects in title, that may become subject to this agreement. Failure to deposit said funds shall constitute a full default under this agreement and all means to enforce this agreement shall become optional and at the disposal of ATG.


Signature Signature


Address: Address: City, State, Zip: City, State, Zip: Phone: Phone:

Accepted:

By: Signature

80

PERSONAL UNDERTAKING (GAP)

ATG FORM 3040 FOR USE IN: ALL STATES © ATG (REV. 12/11)

Escrow No.:

WHEREAS, Attorneys’ Title Guaranty Fund, Inc., hereinafter referred to as “ATG®,” is about to issue its title insurance policy,

policies, or commitments, all hereinafter referred to as the “Title Insurance Policy” No. , in respect to the Land described;

AND WHEREAS, ATG has raised as title exceptions to title the following:

Defects, liens, encumbrances, adverse claims, or other matters, if any, created, first appearing in the public records, or attaching subsequent to the Effective Date hereof, but prior to the date the proposed Insured acquires for value of record the estate or interest or mortgage thereon covered by the Commitment.

AND WHEREAS, ATG has been requested to issue the Title Insurance Policy, and may hereafter in the ordinary course of its business issue title insurance policies or commitments therefore in the forms now or then commonly used by ATG in respect to the Land or to some part or parts thereof, or interest therein, all of the foregoing being hereafter referred to as Future Policies, either free and clear of all mention of the Exceptions to Title or insuring against loss or damage by reason thereof;

NOW THEREFORE, in consideration of the issuance of the Title Insurance Policy and the payment of $1.00 to the undersigned by ATG, the sufficiency and receipt of which is hereby acknowledged, the undersigned, jointly and severally, for themselves, their heirs, personal representatives, and assigns do hereby covenant and agree with ATG: 1) to forever fully protect, defend, and save ATG harmless from and against all the exceptions to title or any rights growing out thereof, all loss, costs, damages, attorneys’ fees, and expenses of every kind and nature which ATG may suffer, its consequence of the Title Insurance Policy on account of the exceptions to title or any rights growing out thereof, or of account of the assertion or enforcement or attempted assertion or enforcement thereof; 2) to provide for the defense, at their own expense, on behalf and for the protection of ATG and any parties now or hereafter insured against loss or damage under the Title Insurance Policy (but without prejudice to the right of ATG to defend if it so elects) in all litigation based on any exceptions to title, which may be asserted or attempted to be asserted, in respect to the Land, or any part thereof, or interest therein; 3) to pay, discharge, satisfy, or remove all the Exceptions to Title on reasonable demand; and 4) that each and every provision herein shall extend and be in force concerning future policies.

The foregoing notwithstanding, it is hereby covenanted and agreed, and expressly made a part of this agreement, that the liability of the undersigned hereunder shall cease and determine at such time as ATG shall have completed all of its various title searches covering the date of disbursement, including the final disbursement required for the issuance of the above policy, provided, however, that: 1) no exceptions to title or rights growing out thereof are disclosed by the said various title searches and examination thereof; 2) there is then pending no suit, action, or proceedings, either direct or collateral, to assert, establish, or enforce the said exceptions to title or rights growing out thereof; 3) that no judgment, order, or decree rendered in any such proceeding remains unsatisfied; and 4) that the undersigned is not in default in the performance of any of the terms, covenants, and conditions hereof.

It is understood and agreed by and between the parties hereto that this agreement, at the option of ATG, shall be converted to ATG’s standard form Title Indemnity Agreement within fifteen (15) days of written demand for deposit in an amount not to exceed 150% of the total of any liens, rights, claims, encumbrances, or defects in title that may become subject to this agreement. Failure to deposit said funds shall constitute a full default under this agreement and all means to enforce this agreement shall become optional and at the disposal of ATG.


Signature Signature


Address: Address: City, State, Zip: City, State, Zip: Phone: Phone: Accepted:

By: Signature

81


CHAMPAIGN 2102 Windsor Place P.O. Box 9136 Champaign, IL 61826-9136 217.359.2000 Fax: 217.359.2014

CHICAGO One South Wacker Drive 24th Floor Chicago, IL 60606-4654 312.372.8361 Fax: 877.892.6282

WISCONSIN N14W23800 Stone Ridge Drive Suite 120 Waukesha, WI 53188-1144 262.347.0102 Fax: 262.347.0110

LENDER’S INITIAL ESCROW CERTIFICATION

To: Attorneys’ Title Guaranty Fund, Inc. ATTN: From: Escrow No.: Project Name: Address:

Pursuant to the requirements stated in the escrow instructions, the undersigned does hereby approve for loan disbursement purposes the following: 1. The condition of title as shown in Attorneys’ Title Guaranty Fund, Inc., Commitment No. , with an effective date of . 2. An Owner’s Sworn Statement dated , disclosing the various contracts entered into by the Owner and setting forth the names of the contractors, work or materials to furnished, amounts of the contractors, amounts paid, and

balance due. 3. A Contractor’s Sworn Statement dated , setting forth in detail all contractors and material suppliers with whom he has contracted, work or material furnished, amounts of the contracts, amounts paid to date, and balance due.

Lender:

By:

Date:

82

MECHANICS’ LIEN RISK ASSESSMENT

ATG FORM 4030 FOR USE IN: ALL STATES © ATG (6/12) Page 1 of 5

This form is to be completed by ATG or ATG Member’s office only. Do not send to client. Commitment No.: Escrow No.: ATG Member: Member No.: Project Name: Address:

Name Work/Cell Phone E-Mail Fax

Prepared by: Underwriting Review by: Submitted by:

SUMMARY OF TRANSACTION AND EXTENT OF RISK:

STRUCTURE AND FORM OF COVERAGE TO BE CONSIDERED Delete Exception: Yes No Incremental: Construction Loan Disbursement - Direct Payment Endorsement (ALTA 32.1-06) (ATG Form 2128-06) Other endorsement form or pending disbursement style language? Yes No (If yes, please attach.) Additional comments regarding structure of coverage and method of ongoing review:

DOCUMENTATION The following documents were reviewed and are attached hereto: Owner:

Financial Statements Indemnity Agreement Appraisal Pictures and Maps of Project Loan Documents (Loan Agreement, Note, and Trust Deed) with Disbursement Budget Construction Contract (executed copy) with Cost Breakdown Purchase and Sale Agreement (if any) Other:

Contractor: Financial Statements Indemnity Agreement Subordination Agreement

83


CLIENT CONSIDERATIONS Description of particular client considerations, if any, that were made:

PREMIUM CONSIDERATIONS Description of additional premium being charged, if any, and how it was determined:

MISCELLANEOUS CONSIDERATIONS Is there an existing or threatened claim? Yes No

If yes, please describe: Describe recording gap risk, if any: Other:

RECOMMENDATION/ANALYSIS AND CONCLUSIONS:

PROPERTY AND CONSTRUCTION INFORMATION Appraised Value on Completion: $

Source of Information: Total Cost of Construction: $

Source of Information: Construction Contract Lender Other: Construction: New Rehabilitation Tenant Improvements Other: Type of Project: Commercial – Office Commercial – Retail Apartments Industrial Residential – Single Residence Residential – Tract Multi-Family (1-4 units) Other: Improvements: On-Site Only Off-Site Only On-Site and Off-Site Stage of Completion: Type of Contract: Fixed Price Time and Materials Other: Will construction commence prior to recordation? Yes No If construction has started, does commencement affect priority in your state? Yes No Other State Law Considerations:

LOAN INFORMATION, SOURCE OF FUNDS, MISCELLANEOUS INFORMATION Amount of Loan: $ Land Draw: Yes No If yes, Amount: $ Loan Type: Construction (Indicate type): New Refinance Modification Additional Advance Permanent (Indicate type): New Refinance Modification Other:

84


Hard Costs $: Soft Costs $: Owner’s Equity $: Form of Owner’s Equity: Cash already paid into project or on hand: $ Land: $ Other (sale of property, investors, etc.): Amounts in the construction contract not covered in loan disbursement budget: Hard Costs $: Soft Costs $: Total $ Description of Disbursement Controls:

Do you have executed copy of loan documents? Yes No Are there any guarantors? Yes No Name(s) of Guarantor(s): Is there a take-out loan commitment? Yes No Do you have a copy of the executed loan commitment? Yes No Name of Take-Out Lender: Is there a sale contract for the completed project? Yes No Do you have an executed copy? Yes No Are there leases for the completed project? Yes No If yes, percentage pre-leased: % Names of major tenants: Is there evidence that all liens have been paid? Yes No

Describe: Are there any mechanic’s liens currently of record? Yes No

Total No. of Liens: Total Amount of Liens: $ Reason liens have not been paid:

OWNER INFORMATION: Owner(s): Type of Entity: Individual Corporation General Partnership Limited Partnership LLC Trust REIT Have you reviewed and approved copies of formation documents? Yes No Contact Name: Address: City, State, Zip: Phone: Cell Phone: Fax: E-mail: Years of Owner’s Construction Experience for This Type of Project: Owner’s Prior Projects:

All successfully completed? Yes No Owner’s Current Projects: Owner’s Reputation with Us: Owner’s General Reputation: Owner’s Financial Condition:

Source of Information: Audited Financials Unaudited Financials Other: Will owner(s) execute an indemnity? Yes No

Who will execute?

85


CONTRACTOR INFORMATION: Contractor: Type of Entity: Individual Corporation General Partnership Limited Partnership LLC Trust REIT Have you reviewed and approved copies of formation documents? Yes No Contact Name: Address: City, State, Zip: Phone: Cell Phone: Fax: E-mail: Bondable? Yes No Bonds for This Project; Type/Amount: Years of Contractor’s Construction Experience for This Type of Project: Contractor’s Prior Projects:

All successfully completed? Yes No Contractor’s Current Projects: Contractor’s Reputation with Us: Contractor’s General Reputation: Contractor’s Financial Condition:

Source of Information: Audited Financials Unaudited Financials Other: Will contractor execute an indemnity? Yes No Will contractor execute a subordination? Yes No

LENDER INFORMATION: Lender: Type of Entity: Bank Insurance Company LLC Corporation Limited Partnership General Partnership Trust REIT Individual(s) Other: If lender is an entity, which state governs its formation? Contact Name: Address: City, State, Zip: Phone: Cell Phone: Fax: E-mail: Lender’s Years of Lending Experience for This Type of Project: No. of Loans Lender has Previously Made to Owner: Lender’s Reputation with Us: Lender’s General Reputation: Lender’s Financial Condition:

Source of Information: Audited Financials Unaudited Financials Other:

LOT/HOME SALE INFORMATION Sale Price: $ Market Time: No. of Units in Project: No. of Units Sold: Suitability for the Community: Homeowner’s Fees/Special Assessments: $

86


ATTACHMENTS Attach additional pages and information as required above.

SIGNATURES I recommend that we insure this transaction: Yes No No opinion

Signature Title Date


Concurring recommendations, if any:




Dissenting recommendations, if any:




87

ENDORSEMENT


Date Member No. Signature of Member or Authorized Signatory ATG FORM 2128-06 (ALTA FORM 32.1-06) FOR USE IN: ALL STATES © ATG (8/11)


CONSTRUCTION LOAN DISBURSEMENT – DIRECT PAYMENT ENDORSEMENT (ALTA 32.1-06)











the Date of Coverage, over any Mechanic’s Lien if notice of the Mechanic’s Lien is not filed or recorded in the Public Records, but only to the extent that direct payment to the Mechanic’s Lien claimant has been made by ATG or by the Insured with the ATG’s written approval.



b. to the extent that the Mechanic’s lien claimant was not directly paid by the ATG or by the Insured with the ATG’s written approval.

88




WISCONSIN N14W23800 Stone Ridge Drive Suite 120 Waukesha, WI 53188-1144 262.347.0102 Fax: 262.347.0110

CERTIFICATE OF COMPLETION


Pursuant to the above captioned escrow, the undersigned hereby certifies that Attorneys’ Title Guaranty Fund, Inc., is authorized and directed to disburse the sum of $ , in accordance with the Owner’s Sworn Statement dated , and/or the General Contractor’s Sworn Statement dated . The undersigned further certifies to Attorneys’ Title Guaranty Fund, Inc., that all work for which the above payment is requested, and all prior work for which payment has been made, has been satisfactorily completed and all materials are in place.

Signed:

Date:

89

ATG FORM 4114 FOR USE IN: IL, IN © ATG (REV. 7/12)



OWNER’S PAYMENT AUTHORIZATION


The undersigned hereby authorizes and directs Attorneys’ Title Guaranty Fund, Inc., as Escrowee, to disburse the sum of $ , as requested on the General Contractor’s Sworn Statement, dated , in accordance with the above captioned escrow project.

The undersigned also authorizes and directs Attorneys’ Title Guaranty Fund, Inc., as Escrowee, to disburse the sum of $ , as requested on the Owner’s Sworn Statement, dated , in accordance with the above captioned escrow project.

Signature of Owner

Date

90

ENDORSEMENT

This endorsement is issued as part of the policy. Except as it expressly states, it does not: (i) modify any of the terms and provisions of the policy; (ii) modify any prior endorsements; (iii) extend the Date of Policy; or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.

Date Member No. Signature of Member or Authorized Signatory

ATG FORM 2129-06 (ALTA 33-06) © ATG (REV. 8/12)

FOR USE IN: IL, IN


DISBURSEMENT ENDORSEMENT (ALTA 33-06)

1. The Date of Coverage is amended to . a. The current disbursement is: $ . b. The aggregate amount, including the current disbursement, recognized by ATG as disbursed by the Insured is: $ . 2. Schedule A is amended as follows:

3. Schedule B is amended as follows:

Part I

Part II

91